SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 1996
Commission File Number 0-10763
ATRION Corporation
(Exact Name of Registrant as Specified in its Charter)
Alabama 63-0821819
(State or Other (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation or
Organization)
Post Office Box 918, Florence, Alabama 35631
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code
(205) 383-3631
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934, during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2)
has been subject to such filing requirements for the
past 90 days.
Yes X No _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class: Common Stock, Par Value $0.10 per share
Outstanding at September 30, 1996 - 2,129,434 shares
<TABLE>
PART 1 - FINANCIAL INFORMATION
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Nine Months
Ended Sept 30, Ended Sept 30,
1996 1995 1996 1995
(in thousands, except per share data)
<S> <C> <C> <C> <C>
OPRTNG REVENUES:
Industrial sales $ 16,648 $ 11,188 $ 60,649 $ 28,806
Resale sales 3,175 1,617 12,701 7,271
Transportation 2,019 2,466 8,129 8,240
Off-sys sales & other 78 455 3,299 4,770
Med and hlth car prod 7,138 2,408 15,191 7,870
TOTAL OPRTNG REV 29,058 18,134 99,969 56,957
COGS 23,403 14,027 83,127 44,157
GROSS MARGIN 5,655 4,107 16,842 12,800
OTHER OPER EXP:
Operations 2,768 1,776 7,820 5,422
Maintenance 72 79 167 205
Dep and amort 377 294 1,052 894
Other taxes 89 96 276 286
3,306 2,245 9,315 6,807
OPERATING INC 2,349 1,862 7,527 5,993
RCVRY EST NONRCVR
TAKE-OR-PAY EXP 473 0 473 0
OTHER INCOME:
Intrst and invest inc 95 116 279 354
Other income 46 26 366 136
141 142 645 490
INTEREST EXP 192 37 317 137
INC BEFORE TAXES 2,771 1,967 8,328 6,346
INCOME TAXES 1,012 713 3,022 2,300
NET INCOME $ 1,759 $ 1,254 $ 5,306 $ 4,046
EARN PER SHARE $ 0.83 $ 0.59 $ 2.50 $ 1.91
DIVIDENDS PER SHR $ 0.30 $ 0.30 $ 0.90 $ 0.90
AVG SHRS OUTSTAND 2,128,184 2,118,010 2,122,751 2,116,490
The accompanying notes to consolidated financial
statements are an integral part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<CAPTION>
Sept 30, Dec 31,
1996 1995
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Csh and temp csh invest $ 2,417 $ 2,811
Accts recv, includ $1,860,000
in 1995 of t-o-p settle csts 10,867 13,890
Materials and supplies 545 689
Inventories 3,534 717
Prepd exp and other 580 288
17,943 18,395
PROP, PLANT & EQUIP:
Original cost 41,839 35,447
Less - acc dep and amort 16,528 15,725
25,311 19,722
DEFERRED CHARGES:
Patents 5,176 5,505
Goodwill 6,264 2,652
Other 1,951 2,232
13,391 10,389
$ 56,645 $ 48,506
(CONTINUED)
The accompanying notes to consolidated financial
statements are an integral part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
SHAREHOLDERS' EQUITY AND LIABILITIES
<CAPTION>
Sept 30, Dec 31,
1996 1995
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 453 $ 203
Accounts payable 9,933 12,646
Accrued income and other taxes 726 537
Accrued interest 16 0
11,128 13,386
L-T DEBT, LESS CURNT MATURT 8,281 1,609
OTHER LIAB & DEFERRED CREDITS:
Accumulated deferred income taxes 1,978 1,559
Unamortized investment tax credits 229 243
Other 1,445 1,739
3,652 3,541
COMMON SHRHLDRS EQUITY
Cmn shrs, par val $0.10 / share; auth
10,000,000 shrs, iss 2,280,000 shrs 228 228
Paid-in capital 6,172 6,078
Retained earnings 28,919 25,525
Treasury shares, at cost (1,735) (1,861)
33,584 29,970
$ 56,645 $ 48,506
The accompanying notes to consolidated financial
statements are an integral part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1996 1995
(In thousands)
<S> <C> <C>
CSH FLOW FROM OPER ACTVTIES:
Net income $ 5,306 $ 4,046
Adjust to reconcile net inc to net csh
provided by operating activities:
Depreciation and amortization 1,851 1,474
Deferred income taxes 414 70
Take-or-pay recov (net of expend) 1,362 1,883
Other (579) (433)
8,354 7,040
Change in crnt asset and liab:
Decr in accts receiv 3,536 705
(Incr) decr in other crnt assets 49 (447)
(Decr) in accts payable (4,174) (2,043)
Incr in other crnt liab 204 155
7,969 5,410
CSH FLOWS FROM INVEST ACT:
Prop, plnt and equip additions (1,907) (820)
Acq of Halkey-Roberts Corp (11,650)
(13,557) (820)
CSH FLOWS FROM FINANC ACT:
Incr ( decr) in long-term indebt 6,885 (615)
Issuan (repurchase) of cmmn shrs 219 45
Cash dividends paid (1,910) (1,905)
5,194 (2,475)
Net incr in csh and temp csh invest (394) 2,115
Csh & temp csh invest, begin of pd 2,811 440
Csh & temp csh invest, end of pd $ 2,417 $ 2,555
Cash paid for:
Intrst (net of capt amnts) $ 302 $ 120
Income taxes (net of refunds) 2,554 2,219
The accompanying notes to consolidated financial
statements are an integral part of these statements.
</TABLE>
ATRION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments necessary
for a fair presentation of results of operations for the
periods presented have been included in the accompanying
unaudited consolidated financial statements of ATRION
Corporation (the Company). Such adjustments consist of
normal recurring items. The accompanying financial
statements have been prepared in accordance with the
instructions to Form 10-Q and include only the
information and notes required by such instructions.
Accordingly, the consolidated financial statements and
notes thereto should be read in conjunction with the
financial statements and notes included in the Company's
1995 Annual Report on Form 10-K.
Because of the seasonal nature of certain of the
Company's operations, among other factors, the results of
operations for the periods presented are not necessarily
indicative of the results which will be achieved for an
entire year.
2. Change of Corporate Name
On May 6, 1996, the Articles of Incorporation of AlaTenn
Resources, Inc. were amended, changing its name to ATRION
Corporation. All references to the Company subsequent to
May 6, 1996 will utilize the new name of ATRION
Corporation.
3. Purchase of Halkey-Roberts Corporation
On May 21, 1996, the Company purchased all the
outstanding capital stock of HRC Acquisition Holding
Corp., a Delaware corporation which, in turn, owns all of
the outstanding capital stock of Halkey-Roberts
Corporation, a Florida corporation (Halkey-Roberts),
pursuant to the terms of a Stock Purchase Agreement,
dated the same date between ATRION Corporation and Fenway
Holdings, L.L.C.
The Company paid Fenway a total of $11,650,000 in cash
under the Stock Purchase Agreement, of which $10,000,000
was borrowed under an existing revolving credit facility
with Compass Bank and $1,650,000 was obtained from the
Company's general corporate funds. The excess of cost
over tangible assets acquired of $1.9 million was
allocated to goodwill. Goodwill will be amortized over
its estimated useful life which approximates 25 years.
Halkey-Roberts designs, manufactures and markets
proprietary valves and pneumatic systems used in the
medical and health care, inflation and container
industries.
The following table presents selected financial data on a
pro forma basis assuming the purchase of Halkey-Roberts
had occurred as of January 1, 1995. The pro forma data
reflect estimated asset, liability, revenue and expense
values of Halkey-Roberts and other assumptions which are
based on estimates and subject to revision. The pro
forma combined results presented are not necessarily
indicative of actual results that would have been
achieved had the acquisition occurred at the beginning of
the periods presented, or of future results.
Three Months Ended
September 30,
1996 1995
Operating Revenues (000) $ 29,058 $ 21,721
Net Income (000) $ 1,759 $ 1,501
Net Income Per Share $ 0.83 $ 0.71
Nine Months Ended
September 30,
1996 1995
Operating Revenues (000) $106,033 $ 68,200
Net Income (000) $ 5,547 $ 4,417
Net Income Per Share $ 2.62 $ 2.09
For further information regarding the acquisition of
Halkey-Roberts, refer to the Company's Form 8-K Report,
filed with the Securities and Exchange Commission on June
5, 1996.
4. Subsequent Event
On November 7, 1996, the Board of Directors approved a
three-for-two stock split to be effected in the form of a
stock dividend of one share for every two common shares
outstanding. Cash will be paid in lieu of fractional
shares. The split will increase the number of
outstanding common shares to approximately 3.2 million.
The Board of Director's also declared a quarterly cash
dividend of $0.20 per share on all post-split shares,
which is equivalent to the Company's previous quarterly
dividend of $0.30 per share on a pre-split basis. Both
the stock dividend and the cash dividend will be payable
on December 2, 1996 to shareholders of record on November
20, 1996.
The references in the financial statements to number of
shares, per share amounts and market prices of the
Company's common stock have not been retroactively
restated to reflect the effects of the stock split. When
the stock split is recorded, an amount equal to the par
value of the additional shares outstanding will be
transferred from additional paid-in capital to common
stock. On a pro forma basis, assuming the stock split
had occurred as of January 1, 1995, the Company's shares
outstanding as of September 30, 1996 would be 3,194,151
and earnings per share, calculated on average shares
outstanding, would be as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
$0.55 $0.40 $1.67 $1.27
<PAGE>
ATRION CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results For The Three Months Ended September 30, 1996
The Company's consolidated net income for the quarter
ended September 30, 1996 was $1,759,000 or $.83 per share
compared with $1,254,000 or $.59 per share for the third
quarter of 1995. However, net income for the third
quarter included income of $301,000, net of taxes, or
$.14 per share from a favorable adjustment to a reserve
established in 1989 for estimated nonrecoverable take-or-pay expense.
Excluding this item, net income for the
third quarter was $1,458,000 or $.69 per share. The
earnings per share computations are based on shares out-
standing of 2,128,184 in 1996 and 2,118,010 in 1995.
Consolidated revenues of $29.1 million for the third
quarter of 1996 were $11 million or 60% higher than
revenues of $18.1 million for the third quarter of 1995.
The increase in revenues in the third quarter of 1996,
compared to the same period in the prior year, occurred
primarily at the Company's natural gas marketing
subsidiary. This increase between periods resulted
primarily from significant price increases as average
prices for natural gas for the three-month period were
approximately 50% higher than for the same period in the
previous year. Also, during the third quarter of 1996,
the recently acquired Halkey-Roberts unit contributed
$4.0 million, or 36%, of this increase in revenues
between periods. (See Note 3 of Notes to Consolidated
Financial Statements).
Gross margin of $5.7 million in the third quarter of 1996
was $1.5 million or 38% higher than that in the
comparable period in 1995. The increase in gross margin
occurred primarily in the medical and health care
products segment, but did reflect a slight increase in
the pipeline and energy services segment as well. The
increase in margins in the pipeline and energy segment
was the result of the start-up of a gaseous oxygen
pipeline which became operational during the second
quarter as well as increased margins at the Company's
natural gas marketing subsidiary. Margins in the medical
and health care products segment increased as a result of
the acquisition of Halkey-Roberts as well as higher
margins related to higher sales at Ryder International
Corporation (Ryder). The increased sales at Ryder were
attributable to higher sales of traditional products to
existing customers. However, the Company expects that
future sales in its medical and health care products
segment may be adversely affected by a potential decline
in sales of two of the Company's more mature medical and
health care products as newer products gain acceptance in
the market. A decision late in the third quarter by a
major customer to terminate purchases of one of the
Company's medical and health care products which
accounted for $489,000 of the Company's revenue and
$108,000 in net income during the third quarter will
adversely impact future revenues. The Company has
substantially completed negotiations with the customer to
regain all rights to the product, which to date has been
sold exclusively to that customer, in order to permit the
Company to market that product, in its current form or as
modified by the Company, to other potential customers.
The Company has several new medical and health care
products which have recently been introduced or which are
in development and which the Company currently plans to
introduce in 1997 which should help offset the loss of
these sales.
The cost of goods sold of $23.4 million for the third
quarter of 1996, a 67% increase from the same period in
1995, was consistent with the changes in revenues in the
pipeline and energy services segment related to the price
increases referred to above as well as to the acquisition
of Halkey-Roberts.
The Company's operations and maintenance expenses of $2.8
million for the third quarter of 1996 were $1.0 million
higher than in the third quarter of 1995. This increase
was primarily attributable to operating costs at Halkey-
Roberts as well as costs at the Company's medical devices
marketing unit, formed in late 1995 to market and
distribute a newly developed line of products, called
LacriCATH , used in a patented ophthalmic surgical
procedure for treating excessive tearing of the eye.
Depreciation and amortization expense of $.4 million for
the third quarter of 1996 was comparable to that for the
same period in the prior year.
Interest and other income of $141,000 in the third
quarter of 1996 was comparable to that in the third
quarter of 1995. Royalty income from a patent at one of
the Company's medical and health care products
subsidiaries was substantially offset by a reduction in
interest income between years due to the use of corporate
funds for the acquisition of Halkey-Roberts and by lower
interest income on the take-or-pay receivable at the
Company's interstate pipeline subsidiary.
Interest expense of $192,000 in the third quarter of 1996
was $155,000 higher than in the comparable prior-year
period due to an increase in debt related to the
acquisition of Halkey-Roberts.
Income taxes in the third quarter of 1996 were $299,000
greater than in the comparable period in the prior year
due to the increase in income in the current period.
Results For The Nine Months Ended September 30, 1996
The Company's consolidated net income for the nine months
ended September 30, 1996 was $5,306,000 or $2.50 per
share compared with $4,046,000 or $1.91 per share for the
first nine months of 1995. Net income for the nine month
period included income of $301,000, net of taxes, or $.14
per share referred to above which resulted from a
favorable adjustment to a reserve established in 1989 for
estimated nonrecoverable take-or-pay expense. Excluding
this item, net income for the year-to-date period was
$5,005,000 or $2.36 per share. The earnings per share
computations are based on shares outstanding of 2,118,010
in 1996 and 2,116,490 in 1995.
Consolidated revenues of $100.0 million for the first
nine months of 1996 were 76% higher than revenues of
$56.9 million for the first nine months of 1995. The
increase in year-to-date revenues compared to the same
period in the prior year occurred primarily at the
Company's natural gas marketing subsidiary. This
increase between periods resulted from significant volume
and price increases primarily related to colder weather.
Sales volumes by this unit increased by 24% above volumes
for the same nine-month period of 1995 and natural gas
prices increased by 63% compared to the prior-year
period.
Gross margin of $16.8 million for the first nine months
of 1996 was $4.0 million or 32% higher than in the
comparable period in 1995. The increase in gross margin
occurred in both the pipeline and energy segment and the
medical and health care products segment. The increase
in margins in the pipeline and energy segment was the
result of colder weather, increased transportation
revenues to a major industrial customer which increased
its natural gas usage because of equipment failures and
due to the start-up of a gaseous oxygen pipeline which
became operational during the second quarter of 1996.
Margins in the medical and health care products segment
increased as a result of the acquisition of Halkey-Roberts
as well as higher margins at Ryder International
Corporation due to substantially higher revenues. The
Company's medical and health care products revenues and
net income for the first nine months of 1996 associated
with the customer which terminated purchases of one of
the Company's products as discussed above were $1.8
million and $.4 million, respectively.
The cost of goods sold of $83.1 million for the first
nine months of of 1996 represented an 88% increase from
the same period in 1995 and was consistent with the
changes in revenues in the pipeline and energy segment
related to volume and price referred to above as well as
to the acquisition of Halkey-Roberts.
The Company's operations and maintenance expenses of $8.0
million for the first nine months of 1996 were $2.4
million higher than in the same period of 1995. This
increase was primarily attributable to operating costs at
Halkey-Roberts, acquired by the Company in May 1996, as
well as operating costs at the Company's medical devices
marketing unit.
Depreciation and amortization expense of $1.1 million for
the first nine months of 1996 was $.2 million higher than
that for the same period in the prior year, primarily due
to depreciation expense on the new gaseous oxygen
pipeline and the acquisition of Halkey-Roberts.
Interest and other income of $645,000 for the first nine
months of 1996 increased $155,000 compared to the first
nine months of 1995. The increase was attributable to
income from the sale of substantially all of the assets
of a small natural gas distribution subsidiary and income
from a one-time project partially offset by a reduction
in interest income between years. The decline in
interest income was due to the use of corporate funds for
the acquisition of Halkey-Roberts and by lower interest
income on the take-or-pay receivable at the Company's
interstate pipeline subsidiary.
Interest expense of $317,000 for the first nine months of
1996 was $180,000 higher than in the comparable prior
year period due to an increase in debt related to the
acquisition of Halkey-Roberts.
Income taxes in the first nine months of 1996 were
$722,000 greater than in the comparable period in the
prior year due to the increase in income in the current
year period.
Liquidity and Capital Resources
At September 30, 1996, the Company had borrowings of
$7.1 million, related to the acquisition of Halkey-Roberts,
under its $20.0 million revolving loan
facilities with a regional bank and had other long-term
debt, including current maturities, of $1.7 million which
was related to the 1994 acquisition of a medical and
health care products unit. The Company's total debt as a
percent of total capitalization at September 30, 1996 was
21%.
At September 30, 1996, the Company had cash and temporary
cash investments of $2.4 million compared with $2.8
million at December 31, 1995. This decrease of $.4
million was attributable to the use of cash in the
acquisition of Halkey-Roberts, capital expenditures
primarily related to the construction of a gaseous oxygen
pipeline and the payment of dividends, partially offset
by an increase in cash flows from operations, collections
of receivables of take-or-pay costs by the Company's
interstate pipeline subsidiary from its customers and
borrowings on the Company's loan facility to fund the
Halkey-Roberts acquisition.
The Company believes that existing cash and temporary
cash investments, cash flows from operations, borrowings
available under the Company's revolving loan agreement
and other equity or debt financing, which the Company
believes would be available, will be sufficient to fund
operations, potential projects and budgeted capital
expenditures over the next two years.
Regulatory Matters
The cities of Decatur and Huntsville, Alabama, are
currently municipal customers of the Company's interstate
pipeline subsidiary (Alabama-Tennessee). In late 1995 and
early 1996, Decatur and Huntsville entered into 20-year
contracts with Southern Natural Gas Company (Southern), a
wholly owned subsidiary of Sonat, Inc., for Southern to
provide substantially all of the cities' firm natural gas
transportation requirements, beginning in late 1997.
Service by Southern under the contracts is dependent upon
Southern's construction of a new 118-mile pipeline from
Tuscaloosa County, Alabama to northern Alabama. In
January 1996, Southern filed an application with the
Federal Energy Regulatory Commission (FERC) to build the
new pipeline. Southern has announced that it is planning
for the new pipeline to be placed in service by late
1997. This startup date depends on Southern's receipt of
a final certificate of public convenience and necessity
from the FERC and its ability to obtain various other
required permits and to construct the 118-mile pipeline
over the next approximately 12 months. On July 31, 1996,
FERC issued an order in which it made a preliminary
determination that issuance of a certificate of public
convenience and necessity was in the public's interest,
subject to further consideration of environmental issues.
Alabama-Tennessee has filed for a rehearing of this
order at the FERC and otherwise continues to oppose at
FERC the construction of the pipeline.
Approximately 93% of Decatur's contract volume with
Alabama-Tennessee expires on November 1, 1997; whereas
86% of Huntsville's contract volume expires on April 1,
1998. The balance of Decatur's and Huntsville's contract
volumes expires on November 1, 2000. All of the
contracts contain evergreen clauses which provide that
they will automatically renew for one year terms unless
either party gives notice of nonrenewal. Decatur and
Huntsville account for 47% of Alabama-Tennessee's current
total contracted demand. If Southern's proposed pipeline
is constructed and Southern begins providing service to
the cities of Decatur and Huntsville, the Company's
management believes that the adverse impact in 1998 and
thereafter attributable to the expiration of the
contracts with Decatur and Huntsville would be partially
offset by Alabama-Tennessee's reduction of operating
costs, and could be further reduced by the addition of
new municipal and industrial customers and increases in
contract demand by existing municipal and industrial
customers. In an effort to mitigate the anticipated
loss of sales to Decatur, Alabama-Tennessee recently
notified Decatur that it would not renew four contracts
with Decatur which are scheduled to expire on November 1,
1997, and put the 22,044 MMBtu of capacity on Alabama-
Tennessee's pipeline associated with those contracts up
for bid effective November 1, 1997. At the close of the
bidding period on October 14, 1996, Alabama-Tennessee had
received bids for all of the available capacity from
eight bidders for terms ranging from three to twenty
years. Under Alabama-Tennessee's FERC tariff, Decatur
has a right of first refusal to match any or all of the
bids received and thereby preserve its right to the
capacity. Alabama-Tennessee took the position that the
right of first refusal expires on November 20, 1996.
Decatur has not matched any of the bids; however Decatur
commenced a proceeding at FERC alleging that Alabama-
Tennessee's posting of the capacity for bidding should
not have occurred until May 1, 1997 and sought to enjoin
Alabama-Tennessee from selling the capacity at this time.
On November 13, 1996, FERC ruled in favor of Decatur. If
Alabama-Tennessee is unsuccessful in obtaining relief
from this ruling, it plans to put this capacity up for
bid again on or about May 1, 1997. The Company's
management is encouraged by the interest in Decatur's
capacity which has been shown during the bidding process.
However, Alabama-Tennessee is presently unable to
determine whether the same level of interest would be
shown if the capacity is put up for bid in 1997. The
Company's management believes that even with the lower
costs and the replacement of some part of the expiring
firm transportation contracts with Decatur and
Huntsville, Alabama-Tennessee would operate at a break-
even level or incur operating losses for some period of
time after April 1, 1998. For the twelve months ended
September 30, 1996, these firm contracts with Decatur and
Huntsville represented 13% or $2,700,000 of ATRION's
gross margin, or $1,700,000 of ATRION's net income.
However, with the favorable impact of lower costs and the
replacement of a portion of the expiring contracts, the
Company's management believes that the adverse impact on
the Company's annual net income from the loss of these
contracts, beginning in 1998, could be reduced from
$1,700,000 to approximately $750,000 if Alabama-Tennessee
is operating at break even. If Alabama-Tennessee does not
achieve break even, but incurs
operating losses, the adverse impact on ATRION's annual
net income could be greater than $750,000.
In addition to opposing Southern's application at the
FERC, on February 9, 1996, Alabama-Tennessee filed a
lawsuit in the Circuit Court of Jefferson County, Alabama
against Southern and the City of Huntsville asserting
that the firm transportation contract between Southern
and Huntsville violates Alabama's competitive bid law and
requesting that the contract be declared void. The
Circuit Court entered summary judgment for Southern and
Huntsville on August 20, 1996. Alabama-Tennessee is
appealing that ruling in the Supreme Court of Alabama.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
For information regarding certain litigation filed during
the first quarter of 1996, see Item 1 of Part II of the
Company's Form 10-Q for the period ended March 31, 1996.
With respect to the lawsuit filed in the Circuit Court of
Jefferson County, Alabama, on August 20, 1996, an order
was entered granting the motions for summary judgment
filed by Southern and Huntsville and denying Alabama-
Tennessee's motion for summary judgment. On October 2,
1996, Alabama-Tennessee's motion to alter, amend or
vacate judgment was denied, and on November 12, 1996,
Alabama-Tennessee filed a notice of appeal to the Supreme
Court of Alabama seeking reversal of the trial court's
August 20, 1996 order. With respect to the proceeding at
FERC wherein Alabama-Tennessee is opposing Southern's
application to build its 118-mile pipeline, on July 31,
1996 FERC issued an order in which it made a preliminary
determination that issuance of a certificate of public
convenience and necessity was in the public interest,
subject to further consideration of environmental issues.
Alabama-Tennessee's motion for rehearing of this order is
pending before FERC.
On October 6, 1996, the Utilities Department of the City
of Decatur, in Docket No. RP97-26-000, filed a complaint
and motion for expedited injunctive relief related to
Alabama-Tennessee's posting and acceptance of bids to
contract, effective November 1, 1997, for 22,044 MMBtu of
pipeline capacity currently held by Decatur under
contracts which were terminated by Alabama-Tennessee,
effective November 1, 1997 (see "Regulatory Matters").
On October 21, 1996, Alabama-Tennessee filed a response
to the Decatur petition defending its right to offer the
capacity to others at the current time. On November 1,
1996, Decatur filed a second petition, seeking expedited
action on its October 6 pleading. Alabama-Tennessee
filed a second response on November 7. On November 13,
1996, the FERC ruled in favor of Decatur. If Alabama-
Tennessee is unsuccessful in obtaining relief from this
ruling, it plans to put Decatur's capacity up for bid
again on or about May 1, 1997.
There were no other material pending legal proceedings to
which the Company or any of its subsidiaries was a party,
or of which any of their property was the subject, as of
September 30, 1996.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security
Holders.
None
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 Financial Data Schedules (Filed
electronically only)
(b) Reports on Form 8-K
A report on Form 8-K, dated June 5, 1996 was filed
reporting the acquisition of 100% of the capital stock of
HRC Acquisition Holdings Corp., which owns 100% of the
outstanding capital stock of Halkey-Roberts Corporation.
The filing included available financial information on
the acquired company. The remaining required financial
information as well as additional pro forma information
was filed with the Securities and Exchange Commission on
August 5, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
ATRION Corporation
(Registrant)
Date: November 14, 1996 s/s Jerry A. Howard
Jerry A. Howard
Chairman, President
& Chief Executive Officer
Date: November 14, 1996 s/s George G. Petty
George G. Petty
Vice President-Finance
& Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
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0
0
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